Banks & Non-Bank Financial Institutions

Contact Details

Overview

The rating of banks and other financial institutions accounts for a significant portion of GCR’s business, as GCR rates more banks and other financial institutions in Africa than any other rating agency. GCR’s expertise in this market is widely recognised and highly regarded by investors, as we have an unparalleled track record for rating accuracy in Africa. GCR’s methodology for rating banks and other financial institutions covers commercial banks, merchant banks, building societies, discount houses, microfinance institutions, finance and leasing companies and other similar financial institutions. In addition, a methodology for according “quality” ratings (which differ from credit ratings) to funds and asset managers, is also presented.

Methodologies

Global Master Criteria for Rating Banks and Other Financial Institutions, updated March 2017
Incorporating both quantitative and qualitative factors, GCR’s ratings reflect an evaluation of the financial institution’s current financial position, as well as how the financial position may change in the future. In its quantitative analysis, GCR focuses on fundamentals, analysing an institution’s historical and current financial performance. This is used as a foundation for developing expectations regarding the institution’s future financial performance and risk profile, under both normal and stressed operating scenarios. Emphasis is also placed on assessing the operating environment (including both economic and industry risk), strategy, market position, diversification, depth of management, as well as risk management policies and procedures. Download

Global Criteria for Rating Finance and Leasing Companies, updated March 2017
This report details GCR’s approach to according ratings to finance and leasing companies. In terms of this methodology, Finance and leasing companies (‘FLCs”) include all non-bank financial institutions that offer consumer or commercial finance, as well as factoring and leasing companies. This methodology supplements GCR’s Global Master Criteria for Rating Banks and Other Financial Institutions, which is to be read in conjunction with this report. Download

Global Criteria for Rating Microfinance Institutions, updated March 2017
With social development, financial inclusion, and financial sector deepening on the agendas of many developing economies/nations, the facilitatory role played by Microfinance Institutions (“MFIs”) has increased, and they are increasingly used as conduits for attracting/mobilising local, regional or international investor funding. In this regard, investors require clearly defined principles for the credit assessment and performance evaluation of MFIs, which considers both return and development metrics. This methodology supplements GCR’s Global Master Criteria for Rating Banks and Other Financial Institutions, which is to be read in conjunction with this report. Download

Global Master Criteria for Rating Funds and Asset Managers, updated March 2017
GCR’s management quality and fund ratings differ from its credit ratings, which refer to an issuer’s ability to meet its debt/liability obligations. GCR’s asset manager (“management quality” or “mq”) ratings assess an asset manager’s organisational structures, management characteristics, client and market profile, financial sustainability, risk management capabilities, and portfolio management and operational practices/controls, in order to determine the organisation’s overall quality. GCR’s asset management ratings are intended to assist investors in comparing portfolio managers’ skills sets, and facilitate the process of evaluating investment management firms’ overall quality, regardless of size, ownership structure, and scope of operations. GCR’s fund (“f”) ratings are an independent assessment of a specific fund’s exposure to factors that could lead to unexpected net asset value and total return volatility, taking into consideration the critical role that the fund’s manager plays in determining fund value and variability. Download

Global Criteria for Rating Multilateral Development Banks, September 2017
This Criteria (“the Criteria”) details GCR’s approach to according ratings to multilateral development banks (“MDBs”). MDBs are supranational institutions, formed by two or more countries/governments (“member countries/states”) to promote social and economic development within the member states (although some MDBs have mandates that extend outside member states). MDBs typically provide development financing, advisory services and/or other financial services to member states, with the aim of improving living standards through sustainable economic growth. MDBs fall under GCR’s financial institutions ratings division, with a broadly similar rating process and analytical framework applied. As MDBs are typically involved in lending and borrowing activities, they share many characteristics with traditional banks.Download